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The embezzlement incident was costly, with additional losses still being discovered. The loss <br />submitted to the insurance company was over $790,000 but does not include related costs such as <br />attorney fees, consultants, and financial training.' Some of the loss may be covered by insurance, <br />but as of May 1, 2013, the insurance company has denied the claim citing misrepresentation of <br />facts in the District's insurance application and the failure of the District to perform appropriate <br />background checks. <br />Following the embezzlement and subsequent evaluation of the Manager, the Board chose to <br />implement a Performance Improvement Plan in order to improve the Manager's financial <br />management skills. The Board also extended the Manger's employment contract and increased <br />the Manager's compensation. <br />AIso after the embezzlement, a new consultant prepared eight recommendations to improve the <br />district's internal financial controls. (See Appendix D, an excerpt of the consultant's report). The <br />Grand Jury has been advised that these recommendations have been implemented. As a result, <br />the financial system was rebuilt. An interviewee familiar with the consultant's review opined that <br />the Manager had program skills but lacked the fiscal skills necessary for overseeing financial <br />operations. <br />District Board <br />A 21 -member Board governs the District. The voters elect other San Mateo County special <br />district governing bodies, which differentiates them from the Board, whose members are selected <br />by city councils. The District began covering the entire County in 2005. In this circumstance, the <br />Health & Safety Code provides that cities tnay appoint a Trustee to the Board. The Trustees' <br />direct responsibility is to the city councils that appointed them, not directly to the voters. The <br />Health & Safety Code also states that the legislative intent is that members have experience, <br />training, and education in fields that will assist in governing the district.'0 <br />One question raised during the investigation was whether a Board of 21 members could be <br />effective. The Board president appoints members to the following standing committees: Finance, <br />Policy, Strategic Planning, Environmental, and Manager Evaluation. One interviewee stated, <br />"Authority may be dissipated when responsibility gets diffused over a large group." With a large <br />board it can be difficult to have accountability for decisions made. A few Trustees expressed <br />interest in studying another governance model that would reduce the size of the Board. Through <br />document review and interviews, the Grand Jury learned that there are varying opinions <br />regarding what Trustees believe to be their roles and responsibilities. Some Trustees feel their <br />only role is to make policy, while others feel they have more oversight responsibility. <br />When a number of employees tried to approach Trustees to express concerns about the Manager, <br />they were turned away for not following the chain of command. RelatedIy, there was confusion <br />about communications between staff and Trustees. In light of these communication issues, the <br />Peninsula Vector Workers Association requested that the Trustees review and revise the District <br />policies governing communication between staff and Trustees. <br />9 <br />See Appendix A. <br />10 <br />State Health Code section 2021. <br />t76 abed - '311'J <br />